Laverne Industries stock has a beta of 1.40. The company just paid a dividend of $.90, and the dividends are expected to grow at 5 percent. The expected return of the market is 11.5 percent, and Treasury bills are yielding 5 percent. The most recent stock price is $84.75.

A. Calculate the cost of equity using the dividend growth model method

B. Calculate the cost of equity using the SML method.